Big enough to break into our long weekend, what’s buried in the middle of a broadsheet daily paper is important enough to get me online first thing to tap out a few notes. (In so logging onto WordPress I find a fellow blogger in Arizona has just posted a dream along related lines!!)
On Friday morning it would have been hard for me to miss this headline at the foot of my newspaper’s ‘leader’ page:
“Everything is in place for another big crash”
Friday coffee, croissant and crossword starts our weekends. Bringing the yummy-laden tray I find Nina’s torn the crossword off the paper’s back page so that I can read the rest. Being the first of the two days when I buy ‘yesterday’s news’, we read the front-page cartoon and I head straight for the inside – not for editorial, but informative op-ed comments and spot that headline. As Nina writes letters into tiny boxes of the puzzle, I find I’m scribbling notes around this article!
Business, financial commentator and assistant editor Jeremy Warner’s opening shot is,
“Here’s a scary statistic for those meant to know about such things…”
But what rocks my boat in his first two paragraphs is not his mundane explanation – so startling as it is! It’s his reference to this scary statistical financial indicator as being at “one of the highest in nearly 40 years”. Also, that “business cycles last little more than seven years…”.
Subscribers to this blog who’ve ventured on my recent sorties into the nature of cycles will recognise the import of those remarks.
In fact, well-informed Christians would also recall the financial and biblical facts taught in depth by messianic rabbi Jonathan Cahn in his intriguing books The Harbinger and The Mystery of the Shemitah. (We are said to be in a ‘Shemitah Year’ that’s coming to its climax in September.)
However, those books are hardly known on this side of ‘the Pond’ to anyone other than a small fraction of Christians. Therefore, I surmise Cahn’s thesis isn’t well known to the City of London’s financial and business world.
So, it’s particularly poignant that Jeremy’s above-quoted opening continues,
“…After a six-year bull market, the typical stock in America’s S&P 500 shares index is valued on a multiple of more than 18 times estimated forward earnings. This is not just expensive by historic standards, but super-expensive. In fact, according to analysis by Goldman Sachs, it ranks as in the top 98th percentile of historic valuations since 1976, or in other words one of the highest in nearly 40 years. It scarcely needs saying that these peaks tend to signal the top of the cycle, with some kind of bear market or crash just around the corner.” (Emphases added.)
Read his brief article online at How central banks have sown the seeds for the next financial crisis. ‘Strap line’ is, ‘The notion that central governments have somehow got on top of the forces of financial stability is for the birds’, which is the last, and summation of, several notable points I’d underlined for use.
Jeremy briefly sketches the state of play for US and UK economies and the prospect of Greek default on its debts to the Eurozone. He then considers why economic prospects are precarious when stocks, bonds and other asset prices as are so high. In his opinion, the reason is the aggregation of:
- Policies of ‘quantitative easing’ whereby central banks print money, which creates new sources of financial instability within the banking system.
- Consequently, portfolios of conventional asset managers have become so swollen that they match those of the largest banks, thereby shifting credit supply from the banking to the non-banking sector. This has thus become the main threat to stability.
- Buying power of central bank’s money printing is insensitive to price fluctuations and thereby renders normal market judgments meaningless. Therefore,
“all the conditions are in place for a major train crash”.
Also Friday, Greece’s failure to pay the due installment of loan repayment to the IMF was in the news – but this time its chief, Christine Lagarde, was completely taken off-guard. As analyst Ambrose Evans-Pritchard writes on the same day,
“The International Monetary Fund is in very serious trouble. Events have reached a point in Greece where the Fund’s own credibility and long-term survival are at stake.”
In the midst of all these complexities it’s interesting to read reference to the 7 year cycle as well as a hint regarding that of 40 years, both of which feature in the Bible. The first came to prominence as of vital economic importance in ancient Egypt when Joseph told pharaoh his dream of 7 fat cows and 7 thin cows was prophetic. Joseph interpreted it to mean there would be 7 years of plenty followed by 7 of famine and thus enabled Egypt to prepare for the worst (Genesis 41).
It’s so good we can look to the Lord, for He’s in charge…
- Brief introduction to Biblical and economical cycles and the work of Erik Hadik.
- Financial analyst Eric Hadik – Crash Cycles, starting with the Boston Tea Party!
- Erik Hadik’s website – 40 Year Cycles
- Update on Euro crisis (links into EU 40-year cycle)
- Wall St considers Biblical basis of financial crashes
- Prophetic points to ponder on 9/11 (re The Harbinger)